July 26, 2012 / 6:38 AM / 6 years ago

Emerging markets help Unilever avoid rivals' pain

LONDON (Reuters) - Strong emerging markets growth helped consumer goods giant Unilever Plc (ULVR.L) (UNc.AS) avoid the profit warnings of two of its arch rivals, although it cautioned of tougher times ahead due to difficult economies and volatile input costs.

The maker of brands such as Dove and Knorr is facing tough trading in southern Europe and seeing some commodities costs edge up. However, it stuck to its 2012 targets rather than alarm investors like Danone (DANO.PA) and Procter & Gamble (PG.N).

Unilever, with annual sales of 46.5 billion euros, said on Thursday second-quarter underlying sales rose 5.8 percent helped by its lower exposure to problem economies such as Spain than Danone, while it has more business in fast-growing markets like India and Indonesia than P&G.

The 5.8 percent rise beat a company-compiled consensus forecast of 4.8 percent and came after a first-quarter increase of 8.4 percent and 6.5 percent growth for 2011. Emerging markets, which make up 56 percent of sales, saw growth of 11 percent.

Unilever, the world’s No.3 consumer goods group after Nestle NESN.VX and P&G, held its forecast for modest profit margin expansion this year. Its half-year profit margin was flat, but analysts expect it to rise in the second half.

“Looking forward we expect continued volatility, especially in commodity costs and economic conditions ... For 2012 we remain on track to deliver a modest improvement in core operating margin,” said Chief Executive Paul Polman.

Unilever, which counts Lipton, Sunsilk and Lux among its biggest brands, reported core half-year earnings up 6 percent to 0.76 euros a share.

Last month, Danone warned of a hit to profits after recession-hit Spanish consumers switched to cheaper yoghurt, while P&G cut its growth forecasts blaming a lack of big new products and being slow to cut costs. L5E8HJBXR L5E8HK4VH

Unilever is the first of the major European food groups to report with Danone due on Friday and Nestle on August 9.

Unilever Plc shares have risen around 7 percent since the start of June and closed on Wednesday at 2,140 pence.

Reporting by David Jones; Editing by Mark Potter

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